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Unread 2010-11-30, 11:05 PM   #26
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I have always thought about getting into rental properties, I have been in some form of maintenance for about ten years know and think I have the know how to pull something like this off. One thing you have to look out for when renting to someone is Fair Housing laws, also fuck section 8 housing. Right now I work at a apartment complex that has section 42 vouchers and these people fuck your shit up.
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Unread 2010-12-14, 12:53 PM   #27
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Originally Posted by freekwonder View Post
Just make sure your renters are not low life pieces of shit that literally destroy a house so you have to put 15,000+ into it just to make a profit to sell it.
I've never had this happen...three times.

I'm down to one rental property, and as soon as I'm finished with it, it's going on the market (and will probably be sold at a loss after the money spent on repairs).
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Unread 2010-12-14, 05:43 PM   #28
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Are you going to expose a lot of your capital for the second purchase? or are you going put as little down as possible and get a 30 yr mort?
Sorry, just saw this, don't know if you'll see the reply, but oh well. My lender requires a minimum of 20% down for owner-occupied two family buildings. 25%+ for buildings that are investment-only. I'm actually borrowing 20% from a private lender (friend) to avoid paying the PMI. I have a much more friendly interest rate on the 20% I'm borrowing and will be able to save the expenses for PMI bullshit.

From what I understand, it's a bit more difficult nowadays to put minimum cash down on places that are investment only. I don't mind, because I will owner-occupy the top floor, which is an upgrade from where I'm currently living, so I don't mind the heavy down-payment (also worth mentioning that the place I'm moivng into should be pretty maintanence free for a while.

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I've never had this happen...three times.

I'm down to one rental property, and as soon as I'm finished with it, it's going on the market (and will probably be sold at a loss after the money spent on repairs).
That sucks a fat cock, sorry brother.
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Unread 2010-12-22, 08:47 PM   #29
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I was rolling 5 homes at one time, got out in 2003 and never got stung. AND WAS VERY LUCKY!!! It occured to me that buying homes and flipping them was greater. Back then what was going on was inflated property values and they were handing out loans pretty easy , for investment property you had to cough of 10%? I think and alot of that was done in the appraisal and having a lil cash to roll them. It was a stupid , stupid way to buy them. Now you need to purchase any property at about 65 cents on the dollar of full appraised fixed up nice value less repairs. If you are going to stick your neck out make sure you can float whatever you are doing in your normal life and plan on being able to float that house payment on the rental also. If you cannot do it , don't get into it. And be damn sure of the neighborhood you are purchaseing in and I suggest useing Landlords Inc to help you decide who to rent to and listen to them they are good. They will also school you and what to say and what not to say, there are alot of legal headaches about how you conduct yourself. Its not for everyone. I figured out I like buying the house, fixing it the way I wanted to and selling them better. No arguements and when it sold I got my money right then and there.
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Unread 2014-11-19, 09:58 PM   #30
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Well.....4 years after my post I pulled the trigger.

Knew I needed some exposure outside the stock market and love working with my hands when I have time.
So I bought a duplex in really rough shape. All windows will need replaced (boards over a few), all carpet is torn out, kitchen and bathrooms needs help. facias and gutters are pretty messed up.

Hired a guy that wanted to have some fun with a hammer today:


Hoping to get it rented by end of Jan.
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Unread 2014-11-20, 09:30 AM   #31
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Wow...Jumped into renovations quick. Good luck!
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Unread 2014-12-06, 08:55 AM   #32
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The house I am working on now, the previous owner had so many dogs I literally had to gut the entire house down to the studs. I mean all the plaster and lathe, the original hardwood floors, everything.

The house was vacant for about 3 months before I got it, about 5 weeks into working on it someone jacked the AC unit.

SIGH

I've got it about 80% finished now, all that's left are Windows and Cabinets.

Whats nice, is the area I bought the house in, the city is running a improvement plan. So any improvements I make to the property qualifies for a 10 year tax break. First 5 years you pay 0 property taxes, and the next 5 years you pay 50%.
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Unread 2014-12-08, 10:42 PM   #33
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Error we can make a cage for the ac at my work. I'm not sure on the cost
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Unread 2014-12-12, 07:43 PM   #34
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Error we can make a cage for the ac at my work. I'm not sure on the cost
I won't be replacing it until after the Winter, but will keep that in mind.
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Unread 2014-12-15, 04:44 PM   #35
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I have a rental property with good tenants. Never had any issues. They pay on time every month and keep the place nice. Just thought I would share a positive experience with you.
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Unread 2014-12-18, 11:26 AM   #36
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Nice score on the duplex.

We bought a duplex last year to spread the risk, with one side carrying the cost of the mortgage so the other is cash flow.
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Unread 2014-12-18, 02:39 PM   #37
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All windows replaced except large picture windows.
Those will be in this weekend.
All that's left is:
-bathroom walls
-toilet
-paint (halfway done)
-carpet
-electrical
-trim


Last edited by jasman18; 2014-12-18 at 02:49 PM..
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Unread 2014-12-18, 02:50 PM   #38
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What area is the duplex in?
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Unread 2014-12-18, 03:31 PM   #39
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What area is the duplex in?
Topeka
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Unread 2015-01-25, 05:49 PM   #40
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An update:
I cant believe such a sorry looking place can be transformed by:
flooring
lighting
paint.

Looks like I am running a little behind schedule and only half will be ready by end of Jan.







Unforseen things were:
Electrical was completely screwed and unsafe. busted out the old electrical boxes and fished new wires to all electrical boxes and outlets.

Most walls are not true and rooms not square, had to get creative in the bathrooms with spacers and trims to close gaps.

Had to replace all the old pipes behind the tub (new copper and valves)

Kitchen sink is like nothing I have ever seen. cant remove it without taking out the entire counter.
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Unread 2015-02-05, 10:22 PM   #41
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One side is listed! It is about 2 blocks from Washburn University so hopefully that will help.
The other side is about halfway done.
I am using a Realtor to screen all tenants so they should eventually give me a few people to choose from.
I want to be as hands off as possible as I don't want to actively manage these to begin with.
Not saying this will work out bad or good, Just want to document the process in case anyone else is thinking about dipping their toes into real estate.

I now have a mentor who has helped me branch out of my comfort zone of being unsure about real estate.

Hopefully other landlords on here can share some of their advice as well.
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Unread 2015-02-10, 03:56 PM   #42
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I was curious if anyone uses a property management company and how that works. Do they take a percentage of the top? I have looked at a couple of websites to get an idea of what they do, and it looks really attractive for the property owner.
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Unread 2015-02-10, 04:06 PM   #43
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I was curious if anyone uses a property management company and how that works. Do they take a percentage of the top? I have looked at a couple of websites to get an idea of what they do, and it looks really attractive for the property owner.
I don't use one yet, but a friend of mine does. He essentially pays them 8% of the gross rent. They handle pretty much everthing for him, locating tenants, collecting rent, repairs to the house, etc. If something is wrong w/ the property, they call him and he ca either get his own contractor to fix the issue, or they'll find someone.

He owns a dozen single houses, cashflows between $50-150/mo out of each of them, after the management company is paid.

I don't have enough property to make it worth my money yet.
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Unread 2015-02-10, 04:23 PM   #44
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I was curious if anyone uses a property management company and how that works. Do they take a percentage of the top? I have looked at a couple of websites to get an idea of what they do, and it looks really attractive for the property owner.
To do this you will have to own several properties. My brother has several but he pays cash for them. He likes having the collateral if needed. The majority of houses are $ 150k-250k, so ideal houses for the average income people.

He gets $ 2,000 or so for each property in rent and the company keeps 10% of it - but the company deals with everything - find the renters, getting rid of them if needed, checking background, fixing things, etc. Obviously if something needs to be purchased like a water heater or new something, my brother approves it and then take care of it. It has worked well for everyone so far.
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Unread 2015-02-10, 04:50 PM   #45
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I am considering getting into rental property but my wife is not into it. I have some decent money set aside for equity, so cash flow should not be a problem on the right unit(s). I thought this may be one way to do it and ease her concerns.
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Unread 2015-03-16, 10:20 PM   #46
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Learning new things everyday.
The Realtor that listed the property for me suggested to raise the rent $100 per month more than what I thought I would get.
I agreed, and I now have a 18 month lease signed for one side.
With everything new and replaced I don't foresee a lot of repair that will be needed so it will be very good for ROI once the other side is done.
Realtor only charged 1/2 first months rent to screen dozens of tenants. (a steal if you ask me)

Lessons learned so far:
Use experts when you don't have the time, saves time and puts more money into your pocket.

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Unread 2015-04-03, 04:41 PM   #47
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Do you guys do loans for these properties or buy outright?
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Unread 2015-04-03, 09:15 PM   #48
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For this property I put down 50% but would not have done it unless I had cash as a backup. I have seen people go broke by not having reserves.
By using some of the banks money it raised the ROI a lot.
The other side of my duplex is going to be rented May 1. With a total of 7 months of vacancies on each side I will still be over 20% annualized ROI after property management fees, which I really like.
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Unread 2015-05-18, 01:25 PM   #49
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seems to me like the depreciation isnt that much money.
take a 120k house
subtract land value +/- 10k
110k / 27.5 years (maximum depreciation recovery period) = 4k tax deduction per year.
That wont move me into another tax bracket.

you are going to pay more in your mortgage interest
let alone a standard deduction being 11k for married filing jointly.

I could be wrong on some of this stuff but I want to learn more, hence my questions.
smartest reply yet... you must pay CASH for your homes if you plan to make money in long run... if not you are just breaking even if not losing money because your home interest over the years adds up to more than your profit
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Unread 2015-05-19, 10:39 AM   #50
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smartest reply yet... you must pay CASH for your homes if you plan to make money in long run... if not you are just breaking even if not losing money because your home interest over the years adds up to more than your profit
I have to respectfully disagree. I was considering buying a rental house a few months ago. My plan was to get something in the $150K range and pay cash. After putting together a discounted cash flow analysis based on my projected rents, expenses, and income over 15 years I was shocked to see how low my rate of return was. It is really difficult to show a decent return when you have a huge expense up front (cash purchase).

I decided to use the same figures but using leverage (a mortgage). With 25% down, and factoring in the additional expense for my monthly mortgage (factored on a 15 year) my rate of return as about twice as high. The difference is, there was very little income on a monthly basis since there was debt on the property, and a shorter term mortgage.


I decided the best thing for me to do as a long term investment would be to put 25% down on four rental houses, each on a 15 year note. In scenario one (paying cash) I would have one house owned free and clear that likely appreciated about 2% per year or so. If I used the same $150K in cash for my four 25% down payments with debt, in 15 years I would own FOUR houses free and clear, each appreciating at the same 2%.

Bottom line is this:

Scenario 1 - In Year 16 I own one house worth approximately $201,880, but more annual income

Scenario 2 - In Year 16 I own four houses free and clear worth approximately $807,521
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